Chapter 7 Homework Handout - Fall

Chapter 7 Homework Handout - Fall - Chapter 7 Problem 1GP...

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Chapter 7 Problem 1GP At December 31, 2011, Lewis Corp. reported the following information on its balance sheet: Accounts receivable $960,000 Less: Allowance for Doubtful Accounts 80,000 During 2012, the company had the following transaction related to receivables: 1. Sales on account $3,200,000 2. Sales returns and allowances 50,000 3. Collections of accounts receivable 2,810,000 4. Write-offs of accounts receivable deemed uncollectible 90,000 5. Recovery of bad debts previously written off 24,000 Instructions A. Prepare the journal entries to record each of items 1 – 5 above. Assume that no cash discounts were taken on the collections of accounts receivable. B. Enter the January 1, 2012 balances in Accounts Receivable and Allowance for Doubtful Accounts and post the entries to those two accounts (only). Determine the ending balances in each account before moving to part ‘C.’ C. Prepare the journal entry to record bad debts expense for 2012, assuming that an aging of accounts receivable indicates that expected bad debts are $115,000. Date the entry 12/31/2012.
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Chapter 7 Problem 2GP At December 31, 2011, the trial balance of Winchester Company contained the following amounts before adjustments: Accounts Receivable $385,000 Allowance for Doubtful Accounts 2,000 Sales 950,000 Instructions A. Based on the information provided above, which method of accounting for bad debts does Winchester Company use – the direct write-off method or the allowance method? B. Prepare the adjusting entry at December 31, 2011 for Bad Debt Expense under each of
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Chapter 7 Homework Handout - Fall - Chapter 7 Problem 1GP...

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